By LYNDON ZAITZ
Of the Keizertimes
The city’s PERS (Public Employee Retirement System) obligation situation continues as the Keizer City Council voted Monday, Aug. 5, to authorize the issuance of $5.5 million in bonds for pension payments.
The approved amount was more than what was asked for by Finance Director Tim Wood, who told the council at the start of discussions, that the best estimate for funds was $3.6 million.
The council’s vote only starts the process, it did not approve of the issuance of bonds.
The appropriation is to resolve the PERS Tier One and Tier Two employees and retirees, including employer 457 deferred compensation contributions as subject salary.
The council’s authorization directs staff to work with the city’s bond counsel. Once that step is taken it will take at least 30 days. Wood told the council that the bond counsel would advise when the time was right to issue bonds, which will rely favorable interest rates.
The issue brought lively discussions amongst the councils and city staff. Councilor Robert Husseman moved to approve the issue of bonds; the motion died due to a lack of a second.
Other councilors wanted to take it slower, provoking Husseman, who said, “I find it very difficult to look these people (employees, retirees) in the eye and tell them the city council is not interested in considering this resolution tonight, so we can time the market and trying to get a optimal interest rate.”
That statement angered Council President Shaney Starr. “This deliberation, Mr. Husseman, has nothing to do with an unwillingness or refusal to do what is right for our retirees and employees,” she said.
Starr then added, addressing Husseman, “Please do not ever insinuate that I don’t have the best interest of our retirees and employees in mind. Don’t ever make that assumption about me again.”
With the timing of issuing bonds and the uncertainty of where interest rates will be, Finance Director Tim Wood suggested the council approve $5.5 million in bonds, but he didn’t think that whole amount would be needed.
He made that suggestion after several councilors asked what would happen if the original ask of $3.6 million wouldn’t be enough due to unforeseen interest rate changes.
A PERS reporting error could cost hundreds of thousands of dollars, according to City Manager Adam Brown.
The issue is an underreporting of the city’s contributions reportable wages to employee PERS accounts dating back to the early 1990s associated with the City’s matching contribution to employees 457 retirement accounts.
The error was discovered in 2023 in a meeting between Finance Director Tim Wood and the city’s labor attorney, who identified a potential difference in the formula used to calculate what is reported to PERS as reportable or subject wages and pointed out that some contributions had not been reported.
A resolution called for the issuance of $5.5 million in bonds to pay the city’s PERS obligation was passed unanimously.